Creating or becoming a partner in a Mexican corporation: Important Information
Are you interested in becoming a partner in a Mexican business or creating your own corporation? It’s important you understand some of the rules and requirements for foreigners investing in Mexico.
Do you need a Mexican investor to open a business?
Many investors do not realize that, depending on the business activity, a Mexican company can be incorporated with only foreign investors. Real estate businesses, restaurants, clubs, and stores are some examples of businesses that meet the requirements necessary for 100% foreign investment, meaning they do not need to include a Mexican business partner.
There are other activities that may require a certain percentage of Mexican investment and others may be reserved for only Mexican investors or the Mexican Government.
Do I need to have Mexican residency?
To be a shareholder in a Mexican Company, it is not mandatory to obtain Mexican residency. However, all partners must provide their details such as legal name, legal address, and valid identification (passport), as well as their foreign tax information such as your tax ID.
If none of the business partners have Mexican residency, the company must have a legal representative who has a valid Mexican RFC (tax ID) and electronic signature. This person will be authorized to register the company as a taxpayer with tax authorities, among other procedures.
Can I be the only shareholder of a Mexican company?
Yes, this is possible. However, you must have a valid RFC and electronic signature, in addition to being limited in terms of income and activities. This will require you being a Mexican resident. We typically do not recommend the option of being the sole shareholder and will often recommend there be at least two shareholders.
Mexican Corporations & Real Estate Transactions
A legal entity is not limited to the amount of real estate it can acquire. However, the properties must be entered into the legal and accounting records of the company through shareholders’ meetings and the corporation must submit real estate acquisition notices to the appropriate institutions.
If you are interested in signing a purchase contract to acquire a property in Mexico but still do not have a Mexican company to acquire it through, you can request the developer, prior to signing the contract, add a clause requesting that you are allowed to deed the property title in the name of a Mexican company of which you will be the majority partner.
If you’ve already signed the contract as an individual and want to change it in the name of a Mexican company, it will depend on the developer or seller and their availability to make the necessary adjustments. However, once the company is established, a protocolized meeting of partners must be held to relate the payments made by the buyer from their personal account with the company.
What are some other things I should consider?
A company needs a physical address in Mexican territory as a requirement of Mexican tax legislation, ideally the place where its accounting is kept.
A foreign company can act as a partner of a Mexican company as long as it has the necessary documentation notarized, apostilled/legalized and translated if there is any text in a language other than Spanish.
A foreigner as an individual and his foreign company can act as partners in a Mexican company, even if he is the owner or partner of it.
The RFC of the company covers only the company as an entity, but not partners as individuals.
Foreign individuals who want to obtain their own RFC must first obtain their Mexican residency and, later, schedule an appointment to go to the tax authorities to process their personal RFC.
If you need to sign documents for a Mexican company, you must be in the country. However, you can grant a power of attorney abroad so that your lawyers in Mexico can sign the documents on your behalf.
How long will it take to establish a Mexican company?
This depends on how quickly you provide the necessary documents (powers of attorney and/or corporate documentation duly notarized, apostilled/legalized and translated). Once we have all the necessary documents, we can have the initial paperwork ready to sign within 3 to 5 business days.
Once the Mexican company is incorporated, it must be registered as a taxpayer before the Mexican tax authorities. The length of time to complete this process is completely dependent on the tax authorities and is not within Mexlaw’s control.
For more information regarding creating a Mexican corporation or becoming a shareholder in a Mexican company, please contact our team of corporate attorneys at Mexlaw.